Inflation Rate and Interest Rate

It can be inferred as the grand old method of hiking the interest rate to curb the rising inflation rate is not that helpful in the present Indian Economy. Eleven Interest hikes within last 15 months has not only put the corporate offices, but the middle and low income groups also in trouble.

The unexpected rise in Interest rates often affects the loans taken already and the same method supposed to bring down Interest rates is acting counterproductive to cause a further increase in price as the cost of production goes up due to high interest rates.

What the modern India needs are those steps from Government and RBI to reduce production and distribution costs. These direct steps should help to bring a fall in prices than the indirect Interest rate hike policies which in turn affect GDP growth too.